From our Blog...

There were alarmist headlines late last week about the inverted yield curve, something that can signal an upcoming economic recession. The media is quite good at sounding alarms. The implied investor reaction is to retreat to the sidelines until the economic bust is over and get back into the market once the yield curve has developed a healthy steepness.

Many investors apparently thought so. The S&P 500, on Friday, dropped 1.9%, as people reacted as if a recession would happen on Monday. Wise investing is not so simple.

SRI investors want to utilize their investments to contribute to a world and economy that is safer and generates more opportunities for everyone – in addition to providing for their own financial futures. It’s helpful to remind ourselves occasionally how it is we generate the investment assets that allow us to be SRI investors in the first place.

Needless to say, 2018 was a crazy year. The chaos in the country’s politics, fanned virtually every day by our Chaos-in-Chief, finally caught up to the stock markets in the last quarter. The markets narrowly avoided their first bear market since 2008-09 and have begun 2019 with the longest shutdown of the U.S. government in history. The shutdown is causing more economic damage every day and unless some sanity kicks in somewhere to restart government services, this alone could tip the country into recession, accompanied by that long-awaited, and anticipated, bear market.

Lately, we’ve been a bit spoiled. Market volatility, until 2018 (and especially in the last two months), has been relatively tame while trending up in recent years, making it easy for investors to focus on other life matters, knowing their portfolios have been doing fairly well. Yet things never really stay the same for very long, and now the markets seem to mirror the nation’s ongoing political chaos.

Shareowner advocacy is an integral and influential aspect of SRI, and it is currently under attack by the SEC under the Trump Administration. This letter from SRI Investing is to key senators addressing our concerns.

It has been quite some time since socially responsible impact (SRI) investing has been a fringe phenomenon - something only a handful of mission-based organizations and morally-conscious individuals engaged in because they cared as much about doing something decent with their money as earning a return on it. Today, SRI could more accurately be characterized as the single largest and most influential trend in investing, period.

If you’re the kind of investor who likes to worry, then October has given you plenty of stimulus. After this week’s declines in the popular S&P 500 index, the index has lost 8.8% in this month alone, wiping out all the gains that we’ve enjoyed this year, putting the index in negative territory. The once-soaring Nasdaq Composite Index of technology companies tumbled 4.4% on a single day this week. It’s time again to remind ourselves of some tried and true investment wisdom.

Capitalism, succinctly described, is characterized by the singular drive of corporations, entrepreneurs, and all business entities to maximize short-term income. When business seeks to maximize short-term income as its primary goal, societal wealth grows, but other bad things happen too….. This isn’t theory. It is happening right now, right here in the U.S. and everywhere, all of it.

SRI investors endeavor to invest in the best parts of the economy, that part of the economy that supports more people, more often, and more fairly, while damaging the environment less. Inevitably, though, their investment results are not that different from broader markets that reflect the overall economy.

You might have read, or even heard me say, that we are experiencing a very long bull market. Indeed, it’s the second-longest bull market since World War II – it started in March of 2009 and has continued without a bear market (defined as a decline of 20%) since. Well, yes and no.